Form 5471 Schedule H – Current Earnings and Profits or Taxable Income

Tax adjustments are entered in a journal entry format, with 1 side impacting an income statement account and the other side impacting a balance sheet account. This produces the book/tax reconciling differences that appear on various forms. For each tax adjustment, under

Tax Return Presentation

on the

Foreign

tab, all TRCs and TCCs default to no selection, preventing the adjustment amounts from transferring under

TAS

in

WTB

for

Tax Return: 5471

and

View by: Schedule H

in column

Tax Adjustment

. Select a

62-xxx

series

TRC

to identify the

Form 5471 Schedule H

line where the adjustment will populate. Select the related

TCC

.

TRCs flow to 5471 Schedule H as follows:

Tax adjustments are defined within ONESOURCE Income Tax using accounts in the Federal Chart and are entered in total. For tax year 2020, E&P adjustments are reported in total on lines 1 through 5b and 5d with current earnings and profits reported by basket on lines 5(c)(i) through 5(c)(iii).

During Subpart F calculations, each Federal Chart Income Statement account in a tax adjustment is traced to the related International Summary Chart account using the Federal/International Chart Cross Reference. Once an international account is identified, the federal account amount is allocated using the basket ratios on the E&P by Basket – after Dividend Look Thru Report. If sourcing is not available (such as when a federal account is not cross-referenced to an international account or when an international account balance has been eliminated due to intercompany transaction netting), the federal account balance will be assigned to the general limitation basket.

Use the

Subpart F > Form 5471 and 8858 Reports > Form 5471 Schedule H by Basket Report

to review the amounts that transfer to Organizer. The report mirrors the Working Trial Balance Schedule H view with data broken down by TRC (Schedule H lines 2a-2i) by row and baskets appearing as separate columns. Data in the

Total

column flows to Schedule H lines 1 & 2a-2i with the basket totals on the report line

Current Year E&P

transferred to Schedule H lines 5(c)(i)-5(c)(iii).

When

International Compute > Transfer to US5471, US8865, US8858

is run, amounts are pushed to the “face” of the Schedule H in Organizer (not hidden screens as is the case with Schedule C & F). FOGI balances are included in the amounts reported in the General Limitation basket on line 5(c)(i). While U.S. or treaty basket amounts (if used) flow to Schedule H lines 1 and 2a-I of the schedule, the amounts will not be reported in the basket breakdown on line 5(c). The system will generate a comprehensive edit error if GILTI and Foreign Branch Income source codes are used in a legal entity that is not a foreign partnership with at least 1 direct FTC owner.